Finding yourself in a difficult financial situation can be scary. Facing the
possibility of dealing with bankruptcy can be even scarier, especially since
most individuals or businesses don’t spend time making themselves aware of the
legalities that go along with the process. Since many debtors are ashamed of the
situation, they often fear asking too many questions regarding the process. As
bankruptcy is one of the most important financial decisions a business or
individual will ever make, it is essential to have correct bankruptcy
information before getting starting with the process.
The federal court systems in the United States deal with all bankruptcy
information and set the laws regarding the process. This does not mean that an
individual has to go to Washington D.C. to file though, as each state will deal
with individuals and businesses during proceedings. This may mean going all the
way to the state capitol though. The federal laws on bankruptcy information
state that these laws are in place simply to give an honest, but fallible debtor
a fresh start.
One of the most important pieces of bankruptcy information to know is that
the courts don’t come to the individual or business to file, the individual or
business goes to the courts. Simply by filing a petition called a Statement of
Intentions, the debtor lets the court system know that they are applying for
bankruptcy.
Just because a debtor files the Statement of Intentions does not always mean
they will go all the way through the legal system. The courts will need to
gather important bankruptcy information through forms that will need to be
filled out by the debtor. These forms allow the courts to review a debtor’s
credit history, list current creditors and the amounts of the debts, as well as
current and past work history. From this the federal court system will make a
determination as to whether or not a debtor can proceed with the court case.
Keep in mind that the debtor does not have to hire an attorney to represent
them through the proceedings, although attorneys can be a great source of
knowledge regarding bankruptcy information. Many debtors are scared to hire an
attorney because of additional charges that they cannot afford, but most
attorneys are reasonably priced due to the circumstances. Often times attorneys
will not charge a fee for an initial consultation when the debtor is simply
trying to acquire bankruptcy information.
Unfortunately, most of the general public does not have a thorough
understanding of bankruptcy information. This causes misconceptions regarding
bankruptcy. One of the major misconceptions of bankruptcy is that all
possessions are taken and repossessed by the courts. Since there are many
different chapters of bankruptcy, there are also many different takes on
repaying debts, and only Chapter 7 requires a complete liquidation of assets.
Even with Chapter 7, debtors are allowed exempts, or items that are necessary
for living.
One more important piece of bankruptcy information to keep in mind is that
there is a new bankruptcy law in place called Bankruptcy Abuse Prevention and
Consumer Protection Act. This law was implemented in 2005 to stop fraudulent
bankruptcy claims and may make it more difficult to convince the courts of a
claim.
Although filing for Chapter 13 and Chapter 11, or reorganization plans, have
not changed that much, filing for Chapter 7 has becoming increasingly difficult.
Previously, debtors were not required to take courses on debt, but with the new
law in place, Chapter 7 debtors are required to take Credit Counseling and
Financial management courses before the process can be completed.
Credit: Ian W Anderson of Bankruptcy 411, the bankruptcy information site.
For more bankruptcy information and articles like this one visit: Bankruptcy.
